Be honest about business plans when talking to landlords
by Jane Weltzin | Rose Law Group Attorney
Given the conflict between state and federal law, marijuana-related business owners face a unique challenge obtaining real property leaseholds. Landlords who are amenable to leasing to a cannabis business are in a predicament.
They are torn between their motivation to do business with the cannabis industry and the risk of civil forfeiture, if the Feds were to enforce the Controlled Substances Act.
This balancing act leads to one of two conclusions by a landlord. They either determine the risk is too great and opt to not engage in any business with cannabis entrepreneurs, or they calculate the risk into the cost per square foot of space and charge a substantial premium.
The Cole memorandums, particularly the one released in August 2013, has given some comfort to land owners and has increased their willingness to lease to businesses in the cannabis space.
Obtaining a property to cultivate or dispense from is essential for success, and the difficulties of obtaining the right to use said property places the bargaining power in the hands of the landlords. Unfortunately, as of right now, landlords have what the industry wants — land to operate from. Therefore, a marijuana business will likely not have the bargaining power a non-cannabis business would have, and is at risk for being subjected to less than favorable terms.
It is important for business owners in the cannabis space to understand the demand and respect the risk the landlord is taking by renting to a cannabis-related business.
